Byline: Nidhi Sharma

MUMBAI: Arrival of fresh stock and weakness in the international market have brought down rubber prices. Though the short-term sentiment looks bearish, prices are expected to move up in the long term in view of low production this year.

The price of rubber

According to a Kottayam-based trader, a lockout announcement by the management of MRF tyre plant has also hit market sentiment. The company is among the leading buyers of rubber in the country.

George Paul of Geojit Commodities feels rubber prices are likely to fall in the short term, but will consolidate at Rs 90 per kg levels, where buying is expected. "In the long term, from January onwards, rubber prices are expected to move up as tapping will slow down affecting supplies," said Mr Paul.

Rubber prices at Bangkok and Malaysian spot markets have also come down. The price in Bangkok is Rs 96.69 per kg while in Malaysia it is Rs 95.76 per kg. Tokyo rubber futures also fell on Wednesday but the reason was the yen's appreciation against the dollar. Osaka futures were also down.

Meanwhile, tapping is on in full swing in Thailand and Malaysia and natural rubber will start arriving in the market next week, which is triggering weak sentiments. Even Chinese importers may go slow on deals as the country will release 19,000 tonnes of old natural rubber stocks by December 18.

Kottayam-based rubber trader Bijosh P Thomas said prices have fallen due to peak arrival time, but will start moving up with low NMCE stocks and slowdown in tapping later this month. "NMCE warehouses have 2,900 tonnes of stock, of which around 1,200 tonnes will be delivered this month," said Mr Thomas.

This year, local rubber production is projected to be over 60,000 tonnes less than the previous year's output of 8.75 lakh tonnes, according to Rubber Board estimates. The shortfall is blamed on the rains that have hit tapping in Kerala, which produces 90% of the rubber.